AT&T to mothball 2G network by 2017

In its latest filing with the Securities and Exchange Commission, US telecommunications giant AT&T has said it plans to sunset its 2G wireless network by January 1, 2017, with the goal of reclaiming spectrum for 3G/4G service.

"Due to substantial increases in the demand for wireless service in the United States, AT&T is facing significant spectrum and capacity constraints on its wireless network in certain markets," the filing, which was published on Friday, states.

Leading those "certain markets" are sure to be high-density urban areas with lots of smartphone users, such as New York and San Francisco, where AT&T customers have long complained about the carrier's spotty service. In 2009, an Apple store employee told one customer that he could expect his iPhone to drop 30 per cent of his calls on AT&T's network in New York.

Voice calls aren't what's gobbling up AT&T's wireless spectrum now, though. According to its SEC filing, AT&T's voice revenues were down a staggering $1.3bn for the first six months of 2012, a decrease of 10.1 per cent from the previous year.

That suggests the carrier's bandwidth problems can be attributed almost entirely to the increase in use of its wireless data services, owing to the exploding demand for smartphones in the US.

AT&T says that for the first time, the majority of its customers now own smartphones – 61.9 per cent, up from 49.9 per cent a year ago. Of those customers, more than a third own 4G-capable devices.

By comparison, only around 12 per cent of the carrier's monthly subscription customers (as opposed to prepaid customers) still use 2G handsets, making the spectrum AT&T has set aside for that service a growing liability.

AT&T has spent billions to build out its 3G/4G network, yet still has struggled to keep pace with the overall increase in network traffic. In its SEC filing it says that its network-related costs grew $209m in the first six months of 2012, due to both surging traffic and its ongoing network enhancement efforts.

Last year, AT&T had hoped to buy its way out of its worries by acquiring rival carrier T-Mobile USA, but when that proposed merger collapsed in December under the weight of federal scrutiny, the carrier was left with few options.

AT&T's filing does not say when it intends to begin phasing out its 2G network, only that it will be a multi-year process. Throughout that process, the carrier says it plans to "work proactively" with its 2G customers to move them to 3G and 4G devices. ®